Regulating Systems 101 (Part 1)

This is the first in a series of posts about systems and how to regulate them. These posts employ a familiar example ― driving to the store ― to introduce the principles and terminology of regulation. They also describe how these same principles are expressed in other situations including a business, a comfortable home and a healthy person. This series leads up to a discussion of how to better regulate major businesses and financial institutions, governments and markets.

First, let’s focus on our definitions of a system and of regulation.

A system is an organized structure that converts resources to outcomes; sometimes referred to as doing work. A car and its driver form a system which converts the energy in gasoline into the movement of people and goods from one location to another.  A home’s climate control system uses the energy of natural gas or electricity to heat or cool air and to distribute it around the home. A temperature control system in the human body uses energy derived from food to maintain a body’s temperature at 98.6 degrees. A television set converts electricity and electromagnetic signals into people friendly sights and sounds. A computer converts electricity and stored data into information, pictures and sounds. A person’s body converts the energy from food into consciousness and the actions of life. A brain that has learned an algorithm for how to add can convert the energy of food and available numbers into sums of those numbers.  A person who has acquired the skills of tennis converts the energy of food into games of tennis. A manufacturer converts raw materials into finished goods.

In the preceding examples I’ve introduced instances of the four classes of systems: inanimate systems (climate controls, TV’s, computers), living systems (people, brains), conceptual systems (algorithms, sets of skills) and hybrid systems (people driving cars, people operating computers, people doing arithmetic and people playing tennis, a manufacturer). Inanimate, living and hybrid systems are physical and are already partially regulated by the laws of nature including the laws of thermodynamics; that is they use energy to produce outcomes and in the process produce wastes so that in total the operation of a system always produces a net increase in entropy.  Conceptual systems, including belief systems and algorithms, are abstract and produce outcomes that are outside the laws of nature even though they are stored and manipulated in the brain, which itself uses energy and produces wastes. In our conceptual systems we can believe in perpetual motion, or in Santa Claus, or that 2 and 2 makes 5, or that we are doing something correctly, or that our  bloated compensation is justified, even though such beliefs are totally unreal or contrary to physical laws.

Regulation is any process which enables a system to produce a predictable, coherent outcome over a reasonable period of time. Regulation improves the stability of systems and enables them to do useful work. However, regulation requires resources and uses energy to produce that predictability and coherence; consequently, a deregulated system is normally simpler and more energy efficient than a regulated one, but its outcomes are incoherent and unpredictable. 

With that preamble, let’s plunge into our first example: you drive to the store. We will answer the question: What are the systems, regulations and regulating mechanisms that make this everyday occurrence safe and its outcome predictable? Let’s start by narrowing our focus to a segment of your trip: when you’re driving on a two lane highway in light traffic with a posted speed limit of 45 mph and a stoplight about a mile down the road. Your subconscious mind―hereinafter referred to as your brain― regulates the direction and speed of your car while you listen to the radio and reflect on what you’ll probably buy at the store. Your hands hold the steering wheel while your right foot presses on the accelerator. Your eyes repeatedly scan the road in front, the rearview mirror and the speedometer collecting images which your brain uses to judge the actual speed and direction of the car, the actions of other drivers, road conditions and traffic signals. When your brain wants the car to go faster, it causes your right foot to increase its pressure on the accelerator which increases the flow of fuel to the engine which enables the engine to generate more energy and turn the wheels faster. When your brain wants to go slower, it causes the right foot to reduce its pressure on the accelerator and may even move it to apply pressure to the brake pedal. To veer right or left, your brain causes your hands to turn the steering wheel.   

However superb your skills and no matter how much you concentrate, your control of the car’s direction and speed― while necessary― is not sufficient to get you to the store reliably and safely because yours is not the only car on the road; roads are shared resources. You automatically drive on the right side, stop at red stoplights and stop signs, and are vaguely influenced by posted speed limits because of a set of driving regulations developed and imposed by a governmental agency. Your brain internalized these regulations when you studied for your driving tests and practiced in traffic with anxious driving instructors. You behave within that set of regulations and you expect that other drivers will too, for the common good.  

By the way, your brain, like the road, is a shared resource that simultaneously manages the act of driving, enables your conscious thoughts, listens to the radio and interacts with your internal systems to support critical biological functions. Your brain has both a genetically imprinted and learned regulatory systems that enable it to multitask successfully. However, just as a highway can become clogged with too much traffic or an accident, your brain can become clogged by too many demands on its resources or by an unexpected event to the detriment of your driving safety.

Now let’s eviscerate this drive to the store by describing it in impersonal engineering terms.  First, the transportation system is a hybrid system; a combination of the car, you as driver and the driving skills imprinted in your brain; without its driver, a car is not a functioning system it is only a pool of dedicated resources.

Your brain regulates the speed and direction of the car based on what it sees, where you intend to go, and your driving skills (which it stores as maps of outcomes and methods). This regulatory relationship is an example of internal, hierarchical management. Your conscious mind―you― are at the very top, like a corporate CEO, who earlier determined the desired outcome of reaching the store and delegated the execution of driving there to your Chief Operating Officer, your subconscious mind, so that you could be self aware and ponder other things. While you learned to drive, your conscious mind was fully engaged, but now you automatically delegate driving to the unconscious until an unexpected event demands conscious attention. This is an example of prudent delegation and management by exception which frees an executive to anticipate goals and objectives and evaluate alternatives.  Should you choose to engage your conscious mind in the details of driving― called micromanaging― you’d be unable to listen to music or consider goals and objectives.  Conscious processing is also slower than conditioned responses, so your reaction times would increase and thereby increase your odds of having an accident.

Your brain (subconscious mind) is at the top of the operating hierarchy using its maps to make decisions, your body is in the middle connecting your brain to the visual data and the car’s control mechanisms, and the car is at the bottom passively responding. Your brain compares the visual data from your eyes (called feedback) to your objectives and internalized rules (decision function or management function) to adjust speed and direction by sending control signals (control functions) to the hands and feet. This form of system regulation is called closed loop because feedback about speed and direction continually influences adjustments to speed and direction. Well designed closed loop regulation usually produces predictable, dependable results over long periods of time; but there are always internal or external conditions which can cause it to fail.  For example, visual distractions, leg cramps, worn brakes, an empty gas tank or a faulty steering wheel could end your trip prematurely; as could a drunk driver speeding towards you and veering into your lane a few feet in front of you.  Internal, closed loop, hierarchical regulation works only as long as internal and external conditions remain within certain limits.

If, while driving, you close your eyes, or engage your eyes and brain in text messaging, then your vehicle’s regulating system will be running open loop; without the regulation of feedback. An open loop system usually consumes less energy and uses fewer or simpler components to produce an outcome ― in this case you could be replaced by a 20 pound weight on the accelerator and a rope holding the steering wheel ― but that outcome would be less predictable and the system more likely to crash.  

(To be continued)